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After losing nearly 225,000 jobs over the past 10 years, the five-county region of Genesee, Lapeer, Livingston, Oakland and St. Clair will finally see positive job growth next year, say University of Michigan economists.

In their first economic forecast for the Economic Growth Alliance, a partnership of five southeastern Michigan counties, George Fulton and Don Grimes of the UM Institute for Research on Labor, Employment, and the Economy say that the region will gain about 2,600 jobs in 2011 and 8,500 jobs in 2012.

“Although we are forecasting that the five-county region will lose another 11,000 jobs this year — painful indeed, but the smallest annual job loss in the region since 2005 — the pattern of job loss is reversed next year for the first time since 2000,” Fulton said.

As a result, the unemployment rate in the region is expected to move downward from 13.7 percent this year to 13 percent in 2011 and 12.3 percent in 2012 — still much higher though than the 8.1 percent rate seen as recently as 2008.

According to the forecast, all of the net job gains over the next two years will occur in the private sector (3,900 jobs in 2011 and 8,800 in 2012). The government sector, on the other hand, will continue to lose jobs (about 1,500) over that time due to the severe fiscal pressure facing state and local governments in Michigan.

Within the private sector, professional and business services will add the most jobs (more than 6,800) over the next two years, followed by private education and health services (more than 3,600 jobs). These two industry sectors account for about 40 percent of all private-sector jobs in the five-county region.

Other large service-providing sectors, such as retail trade (minus 1,500) and financial services (minus 800), will each lose jobs in 2011 and 2012, but leisure and hospitality will add about 1,100 jobs over that time.

In the goods-producing sector, construction — in a job-loss freefall since 2001 — will add more than 3,100 jobs over the next two years. Manufacturing, which currently employs about 76,000 people in the region after losing 3,100 more jobs this year, will shed another 700 jobs next year, before gaining 900 in 2012.

On the inflation front, the region in 2009 saw its first annual price deflation in 60 years. Local inflation returned this year, spurred by an improving economy and some recovery in oil prices, but will remain tame (less than 2 percent) over the next two years.

Fulton and Grimes say that in addition to jobs offered by business and government in the five-county region (establishment employment), another way to measure employment is to look at household employment, the number of residents who say they are working for themselves or for someone else, either in or outside the region.

When viewed this way, a somewhat brighter economic picture emerges, they say. Instead of registering job losses in 2010, the five-county region will add nearly 15,000 household jobs during this year and another 21,000 during the next two years — with the largest gains in Oakland, Livingston and Genesee counties.

“The more favorable outlook for household employment is due in large part to the increasing numbers of self-employed in a tentative hiring environment,” Grimes said.

All of the counties in the region are forecast to see household employment gains in 2011 and 2012 as unemployment rates in each county also drop in each of these years. The largest declines will occur in St. Clair and Lapeer counties.

The Economic Growth Alliance was formed in recognition of the five-county region’s influence as an economic unit of interrelated counties whose impact is greater than its individual parts, and where regional cooperation is integral to promoting the area’s economic development initiatives.